For immediate release Thursday 17 September 1998

AUTIF CALLS FOR IMMEDIATE ACTION ON ISAS

"The only threat to the successful launch of ISAs is the Government itself."

The Director General of AUTIF today called on the Government to move within days to unblock the logjam which threatens to impede the launch of ISAs and to cause many regular savers to stop saving next April.

He explained the need, agreed by the Government, to have all ISA regulations in place before 1 October but pointed out that the FSA regulations have not yet even been seen in draft. The reason for the delay is indecision on CAT marks.

He said:

"There is now a real possibility that many regular savers will not convert from PEPs and TESSAs to ISAs. There is also a real possibility that some major providers will not be ready to launch an ISA in April 1999. That would not be an auspicious launch for a new product and it would help no-one. It would damage the interests of savers and the industry and of Government.

"My message today is quite simple. Get CAT marks out of the way. We need a decision on them very fast indeed and the best decision, certainly so far as equity products is concerned is not even to contemplate them but to work with the industry on the sort of simplifications which we have proposed. We must have FSA regulations very fast, in days, not weeks or months. It is CAT marks, not the FSA which stand in the way.

"The industry wants to make the ISA as successful if not more successful than PEPs and TESSAs. The only barrier to that happening is the Government. It is their policy and their product. I hope very much that they will see sense and move swiftly to convert a potential disaster into the success we all aspire to. The only threat to the successful launch of ISAs is the Government itself."

Other points he made were:

• AUTIF had written to the Government and the FSA in the Spring warning them of the dangers of a delay to the issuing of ISA regulations.
  
  
• Futures and options funds, which allow protected and guaranteed funds to be provided cheaply meet investors’ needs, particularly in current market conditions, and should be allowed from day one.
  
  
• The industry has made a radical proposal to simplify and improve the pricing and disclosure of unit trust ISAs. The industry believes this will provide better value than CAT standards for investors without the dangers of Government endorsement.
  
  
• Resolution is still needed of two issues concerning deposits. Can a non-bank ISA manager accept deposits as agent for a bank? What compensation arrangements would cover a bank ISA manager which is itself neither a bank nor an FSA (IMRO/PIA) registered business?

For further comment please contact:

Philip Warland, Director General, AUTIF 0171 831 0898
Anne McMeehan, Director of Communications, AUTIF 0171 831 0898
Susie Poote, Communications Assistant, AUTIF 0171 831 0898

A copy of the full text of the speech is attached